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How do banks make money?

Last Updated: March 08, 2010

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This seemingly simple question can have a complex answer. Briefly, banks make money by charging interest on loans and from fees. The interest charged on the loan is higher than the interest paid out on deposit accounts. Banks also make money on fee income, ATM fees, transaction services, bounced check fees, and the like. Some banks also make money from non-traditional activities such as securities brokerage.

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